Wednesday 18th June 2025
(1 year, 3 months ago)
Lords ChamberEmployment Rights Act 2025 View all Employment Rights Act 2025 Debates Read Hansard Text Watch Debate Amendment Paper: HL Bill 81-X(a) Amendments for Committee (Supplementary to the Tenth Marshalled List) - (17 Jun 2025)
Lord Sharpe of Epsom (Con)
My Lords, that was a most interesting exchange, and I thank the noble Baroness, Lady Chakrabarti, and my noble friend Lord Jackson for it. As I have said many times, I am not a lawyer, but as a broader observation, there seems to be a slight philosophical discussion developing this evening between intervention and initiation when it comes to various state interventions in certain areas of law.
I have no doubt at all that the intention behind the noble Baroness’s amendment is to strengthen the enforcement of equal pay laws. As she rightly says, we all support that objective, but we feel that this particular proposal is somewhat flawed, not least because we just do not think it will work. At its core, the amendment risks conflating pay disparity with unlawful discrimination. It assumes that if a pay gap exists, there must therefore be wrongdoing. As the noble Baroness, Lady Chakrabarti, acknowledged, it is not that simple, because pay disparities can and often do arise for entirely legitimate reasons, such as differences in experience or qualifications, performance geography or even negotiated terms, to my noble friend Lord Jackson’s point. To suggest that a mere statistical difference is indicative of discrimination is to abandon the nuanced legal framework carefully set out in the Equality Act 2010. While paying a great deal of respect to the arguments—and there is considerable merit in this—we cannot support this amendment.
The Minister of State, Office for Equality and Opportunity (Baroness Smith of Malvern) (Lab)
My Lords, like my noble friend Lady Chakrabarti, I am also an occasional visitor to this Committee, but I am very pleased to be here this evening to address her Amendment 275. I thank her for recognising the engagement there has been with the Government and others on this up to this point.
Certainly, the Government want to make very clear that we share the broad aims behind this amendment. Over 50 years after the Equal Pay Act 1970 and 15 years after the Equality Act 2010, it is clear that equal pay has not yet been achieved. That is why the Government have committed to strengthen the equal pay regime and end pay discrimination. I share the concerns of my noble friend in identifying the challenge of enforcement in this case. There is more we can do to ensure that the onus does not fall only on women to find out whether they are receiving the same pay as their male colleagues for equal work and to take enforcement action against employers in the case of a breach.
It is possible to envisage, in relation to the points made by the noble Lord, Lord Jackson, a system in which you have both the contractual arrangement and the ability to take individual action as is the case now and an enforcement body that supports people doing that in general terms and identifies thematic or consistent ways in which equal pay is being breached. That is why the Government are committed to establishing an equal pay regulatory and enforcement unit with the involvement of trade unions. As part of this, we will carefully consider how we can improve the enforcement of the equal pay scheme.
On 7 April we launched a call for evidence on this issue and wider equality law to ensure that any steps we take will lead to a meaningful strengthening of protections against pay discrimination—an objective that I am sure my noble friend will share. It is important that the Government are able to develop these changes in partnership with business, trade unions and civil society to ensure that the law works for everybody. For that reason, I hope my noble friend will recognise that this will be a more appropriate process through which to address these issues. As she suggests, we will give these areas very close consideration in advance of the equality, race and disability Bill.
In relation to some of the specific points my noble friend raises about the way this might operate, we certainly recognise the benefits that can arise from government departments, including HMRC, working together. HMRC already has a number of joint working and data-sharing arrangements with departments and agencies. The Government are therefore not closed in principle to establishing new data-sharing arrangements with regulatory authorities where this can support their regulatory functions.
My noble friend made a very interesting point about the use of AI. It would not be sufficient simply to compare the pay of different people working within a workplace unless you could also have some analysis of how that applied to the nature of the work and whether that was work of equal value. It may well be that advances in technology, including AI, would be a way in which we could support that monitoring.
Policy is at a very formative stage. My officials will explore a wide range of options to improve the enforcement of equal pay rights. While taking great care to ensure that safeguards are put in place in relation to personal data, particularly where that relates to discrimination and protected characteristics, I suspect the sort of description that she gave of the contribution of AI is very much part of what, across government, we are wanting to see in terms of its use in future.
We are sympathetic to the ultimate objectives of my noble friend’s amendment. I hope she recognises that and the progress that we intend to make on that pledge to deliver stronger enforcement mechanisms and, in particular, an equal pay regulatory and enforcement unit. With that assurance, I hope she feels able to withdraw her amendment.
Baroness Chakrabarti (Lab)
My apologies to the Committee. It has of course been 75 years since the European Convention on Human Rights and 50 years since equal pay legislation—forgive that rather glaring howler. I am grateful to the noble Lord, Lord Jackson, in particular, and to my noble friend the Minister, whose officials have been very generous and thoughtful with their time. I look forward to watching their thinking develop on this forthcoming legislation. With that, I beg leave to withdraw.
Lord Hunt of Wirral (Con)
My Lords, I thank my noble friend Lady Coffey for her amendment. She raises thoughtful and important questions about Parliament’s role as an employer and the complexity of managing the site, which contains over 600 other employers. These are legitimate concerns that deserve proper consideration, not least because Parliament should seek to model best practice in matters of employment and compliance. I think we all agree with that, but does it comply, and should there be a power of entry into these premises to check that we are complying?
My noble friend has made compelling points, and I hope that the Minister will respond with clarity and detail. The concerns that my noble friend outlined are not theoretical; they touch on the credibility of this institution as both lawmaker and employer. I therefore look forward to hearing the Minister’s response and the Government's justification for retaining—or reconsidering—the exemption as drafted.
The Parliamentary Under-Secretary of State, Department for Business and Trade and Department for Science, Information and Technology (Baroness Jones of Whitchurch) (Lab)
My Lords, I thank the noble Baroness, Lady Coffey, for her amendment, which raises an important topic: how the enforcement provisions in Part 5 would apply to Parliament and MPs as employers.
Parliament must of course comply with employment legislation. However, the Bill provides that the powers of entry in Part 5 cannot be exercised in relation to
“premises occupied for the purposes of either House of Parliament”;
otherwise, Part 5 would apply to both Houses of Parliament and to MPs as employers. We are in danger of having something similar to—but slightly less than—a deep constitutional crisis, because the approach was agreed on the advice of the House authorities. It is therefore not a government decision; it is a decision made by the House authorities. They are more powerful, as far as I can see, and they can therefore overrule what the Government may think about all this.
This approach is not unusual. It aligns with recent precedents, such as Section 165(1)(a) of the Building Safety Act 2022, to respect parliamentary privilege. In this case, Parliament has to comply with employment legislation. The only issue raised here is about the power of entry not applying to the Parliamentary Estate. The noble Baroness might understand why we want to make sure that the Parliamentary Estate is secure from that challenge, and there is probably another place where she could raise her concerns about employment in the Parliamentary Estate. I have some sympathy with some of the cases that she argued about, but I suggest that she sees the House authorities about them. I therefore ask the noble Baroness to withdraw her amendment.
Baroness Coffey (Con)
I certainly will withdraw it. I did not mean to put the Minister in a difficult place, and her answer was very gracious. My amendment was based on the expectation that this is a royal palace, where things such as licensing laws and health and safety rules do not technically apply. However, that aside, we still need to consider how we act. If nothing else, I hope that this short debate has contributed to reminding ourselves of the obligations that we all share. With that, I beg leave to withdraw.
Lord Goddard of Stockport (LD)
My Lords, these amendments collectively highlight the critical importance of supporting small and medium-sized enterprises as they adapt to the changes introduced by the Bill. We have raised this issue repeatedly throughout our deliberations. Night after night, this comes up in other parts of the legislation. It all comes back to small businesses. My biggest postbag at the moment is from small businesses concerned about their future—of no political persuasion at all. This is one of the few chances, in this small debate, where we get to talk about those challenges and the enforcement mechanisms, especially around things such as holidays. As alluded to by the noble Lord, Lord Sharpe, compliance can be complex and resource-intensive, although I do not fully agree with his complete doom-and-gloom scenario of this part of the Bill.
Recent data shows that SMEs employ around 60% of the UK workforce, yet many report that regulatory burdens can disproportionately strain their limited administrative capacity. The amendments proposed by the noble Lord, Lord Sharpe, such as Amendment 279ZZB, would place a duty on the Secretary of State to assess how effectively the SMEs can meet those obligations and to identify any practical barriers that they face. It is important to ensure that the Bill’s ambitions do not inadvertently disadvantage the very businesses that form the backbone of our economy. That the Government should have a means of tracking how the Bill’s implementation is impacting on the economy is vital.
I briefly turn to the reviews called for in Amendments 305 and 309, which seek to examine the Bill’s impact on employment, youth opportunities, job creation and regional labour markets, especially in the north-west of England, where my heart still lies and where the Industrial Revolution began. We are trying to embrace AI. We are trying to become ground-breakers again at Manchester University and other establishments. I know that these really affect the regional labour markets, but these are valid concerns, as we are still recovering from the recent economic shocks. The requirement for independent assessment would help us get a clearer picture of this legislation and how it affects businesses and workers. While amendments by the noble Lord, Lord Sharpe, and others are cautious in their approach, they reflect a genuine concern that implementation must be manageable for SMEs, without stifling growth for employment.
As we move forward, I look forward to hearing the Minister’s view on these amendments and would appreciate some remarks about how the Government intend to physically support SMEs throughout these changes and the unintended consequences. Because that is at the heart of this. You can have and develop the policies, but what businesses are asking me is, “What are you going to do? What can I see that helps me to embrace this legislation and to take people on, train them and employ more people?”—as opposed to the perception that the burden is against that, which is an unintended consequence of trying to do the right thing of giving everybody employment rights, and it is a fine line. We are politicians and we understand it a bit clearer than people in a small company employing 10 or 15 people. They are just concerned that something is going to overwhelm them: something is going to come that they cannot control.
I want the Minister to explain the following to me and members of my group. What practical things will the Government put in place to give those small businesses confidence to embrace this and to work with them to make employees more secure, safer and have better rights? Meanwhile, how can small and medium-sized companies, not the giant multi-million companies, carry on creating jobs, developing the economy and lifting us out of the doom and gloom? We have done it before, and we can do it again. That is the question that needs answering—whether or not the Minister can do so tonight, we need some clarity before Report, or we will be meeting other people. This is important. This is not just me grandstanding; small businesses are saying to me, “Just ask the Government what they are doing and how they can help us”. This is what I am trying, clumsily, to say as we draw to a close this evening: if the Minister can give me some hope that what we are doing and have put in place will help small and medium businesses, I will be satisfied.
Lord in Waiting/Government Whip (Lord Leong) (Lab)
My Lords, here we go again on impact assessment. I hope that the noble Lord, Lord Sharpe, will forgive me if some of my notes repeat what was said in previous debates, but I will answer some of the points here. First, I thank the noble Lords, Lord Sharpe, Lord Hunt and Lord Goddard, for their amendments relating to impact assessment.
I refer to the point by the noble Lord, Lord Goddard, about what the Government are doing concerning SMEs. I have just recently been appointed as the spokesperson for the Department for Business and Trade, and my priority is to have regular communications with micro-businesses and small businesses. That is what I will be focusing on. Today, we appointed the Small Business Commissioner, who will start work very shortly in tackling late payments and some of the abuses that small businesses experience from big companies not paying them on time. We will be publishing a small business strategy very soon, and our industrial and trade strategy very soon as well, hopefully sometime next week or thereabouts. We are doing a lot—not only myself but the Secretary of State, my noble friend Lady Jones and all the Ministers in the department. We have regular contact right across the business community.
We have had extensive debate already on impact assessments related to this Bill. My commitment in an earlier debate to meet noble Lords to further discuss the impact assessments still stands. The Government have already published a comprehensive set of impact assessments based on the best available evidence on the workers likely to be affected by these measures. This includes an assessment on the economic impacts of the Bill, including on workers, businesses, sectors and regions. This package shows that there are clear, evidence-based benefits from tackling issues holding back the UK labour market. This analysis is based on the best available evidence and consultation with external experts and stakeholders, including academics and think tanks. Further analysis will be forthcoming, both in the form of an enactment impact assessment when the Bill secures Royal Assent and when we consult on proposed regulations to meet the Better Regulation requirements.
Before I conclude, I share with noble Lords some really startling statistics. We already know that healthier and happier workers are more productive workers. The Health and Safety Executive estimates that stress, depression or anxiety accounted for something like 17.1 million working days lost in 2022-23, which is equivalent to a loss of something close to £5.3 billion in output per year. In addition, close to 2 million employees report feeling anxious about hours worked or shifts changing unexpectedly. By increasing the job security of these workers, the Bill would have well-being benefits worth billions of pounds a year. The Bill will therefore create a healthier and happier workforce, which is not only the right thing to do but will help businesses by making the workers more productive as well as resulting in lower treatment costs for the NHS.
Earlier, the noble Lord, Lord Sharpe, asked me what we have done to support growth since getting elected. I am proud to share with the noble Lord that, since the election, 500,000 more people are in work. In recent weeks, we have had the strategic defence review with some 30,000 new jobs building submarines created, and the announcement of the Sizewell C project, which will create some 10,000 new jobs. So, we are creating new jobs.
In addition, we have people who are investing in this country and who have confidence in this Government. Jamie Dimon, who has run one of the largest US banks, JPMorgan Chase, for two decades, told the Financial Times:
“I’ve always been a believer in the UK’s inherent strengths as a place to do business and there’s much to like about the new government’s pro-growth agenda”.
Further, a couple of weeks ago, Jon Gray, president of Blackstone, one of the largest private equity companies in the world, which has invested close to £100 billion in the UK and employs some 50,000 people, told the Times:
“I would give the UK government a lot of credit for embracing business”.
This is not what the Government are saying, but what people with money who are investing in this country are saying to us. Further, every single day, £200 million is being invested in tech companies in this country. I do not call that a small sum, I call it confidence in the UK Government and what we are doing for business.
Baroness Noakes (Con)
My Lords, I listened very carefully to that wonderfully rosy picture of the UK economy. Can the Minister reconcile that with the most recent employment statistics, which show a decrease in payrolled employment and an increase in unemployment? That does not reconcile with what he is trying to convince us is the case.
Lord Leong (Lab)
I thank the noble Baroness for that. Figures go up and down every month but let us look at it in the longer term. We are creating new jobs and that is what is really important. In conclusion, I ask the noble Lord, Lord Sharpe, to withdraw his amendment.
Lord Sharpe of Epsom (Con)
I am enormously grateful to the Minister for his passionate defence of his Government and for his remarks. I am genuinely delighted that he has taken on a new role in small business because, unlike the vast majority of his Government, he actually knows what he is talking about when it comes to small business. We are very pleased to hear that and we welcome his general remarks. I also agree with Jamie Dimon about the growth agenda, but the fact is the Bill will not help the growth agenda. That is the argument we are trying to make.
I am also grateful to the noble Lord, Lord Goddard, for his remarks. He accused me of being doomy and gloomy, but I did not get those statistics out of thin air; they were all supplied by the employer organisations that we referenced. If he would like, I will happily put him in touch with them all. The fact is that, once again, the Minister could not rise to the challenge of naming a single business that expects to increase hiring because of the measures in the Bill, and references to the strategic defence review do not help that argument.
The other reason why I am doomy is because, the other day, I came across a notice in a window in London that said, “After much reflection, and as a result of the substantial business rate and national insurance cost increases imposed on us in this year’s Budget, we have made the difficult decision to close. Our final day of service will be 28 June 2025”. That is a real business going out of business—that is disgraceful.
The Government’s impact assessment of the Bill, which we have debated a number of times and which I know irritates the Minister every time we bring it up, was simply inadequate. There is not enough detailed rigorous analysis to understand how these enforcement measures will affect businesses and employment across the country. Without that, we are walking blindly into serious economic risks. At this rate, if the Bill proceeds without the necessary amendments and safeguards, it will not just fall short, it will create unemployment. The additional burdens on employers, especially small and medium-sized businesses and crucial sectors like manufacturing, threaten to reduce hiring, stall investment and ultimately cost jobs. This is not speculation; it is happening, as my noble friend Lady Noakes pointed out. It is a clear and present danger based on the evidence that we have seen, and the trend is unlikely to diminish.
We support workers’ rights, but not at the expense of widespread job losses and economic harm. The Government have to provide a proper, thorough impact assessment—one that honestly addresses these risks—before we proceed further. I am grateful to the noble Lord for his offer of a meeting to discuss this, but I am not sure what there is to discuss without the actual impact assessment or the commitment to hold it as soon as possible. If this does not happen, the Bill will fail both workers and employers, and we will face the consequences of higher unemployment as a result. That is something no one wants. I beg leave to withdraw the amendment.
“(2) Any reference in section 134 to HMRC information includes a reference to any information mentioned in sub-paragraph (1)(a) or (d) which—(a) was disclosed to the Director of Labour Market Enforcement or a person falling within paragraph (a), (d), (e), (f) or (g) of paragraph 6(4) by the Commissioners for His Majesty’s Revenue and Customs or a person acting on behalf of the Commissioners, and(b) was not obtained by an officer in the course of acting for the purposes of the National Minimum Wage Act 1998 or by virtue of section 26(2) of the Immigration Act 2016.”Member's explanatory statement
This amendment provides for information previously disclosed by HMRC to enforcement authorities, and treated by paragraph 13 of Schedule 11 to the Bill as having been obtained by the Secretary of State in connection with the exercise of enforcement functions under Part 5 of the Bill, to be treated as HMRC information for the purposes of clause 134, which imposes restrictions on the onward disclosure of such information without authorisation from HMRC.
Member's explanatory statement
This amendment is consequential on my amendments of clause 148 at page 146, line 43 and page 147, line 9.
Baroness Lawlor (Con)
My Lords, I support Amendment 279GA for a sunset clause. I perfectly understand the reason for extending the period in which employees can make claims, but I am quite sure it will increase the burden on the tribunals. We have heard about the very long delay, with even preliminary hearings not scheduled until April 2026, and these delays have continued for some years. People going to tribunal sometimes have to wait more than 18 months just to have the preliminary hearing. If numbers increase, as they are likely to, as my noble friend suggested, it is going to put far more pressure on the tribunals. The parliamentary oversight proposed and the sunset clause must take account of that.
Not only is there no point in law in having a claim left unsettled for years, but it is very bad for business to have the uncertainty. It is very bad for employees and their lives to be subject to such delays and uncertainties in what is going to happen to them professionally, because taking a claim to tribunal is not an easy matter. It can be expensive and full of obstacles. Not knowing how it will pan out is very worrying for people. For businesses, being subject to constant pressures of claims in a tribunal, whether they are justified or not, brings insecurity and a lack of confidence.
For these reasons, I think this moderate request for a sunset clause and coming back to Parliament for an affirmative vote are a good proposal, and I hope the Government will listen kindly to it.
Baroness Jones of Whitchurch (Lab)
I thank the noble Lord, Lord Hunt, for introducing these amendments, but I say to him that the problem he has described so vividly was one we inherited from the previous Government. We are acutely aware that these issues need to be addressed, and I share his desire to ensure that the employment tribunal system can manage its existing caseload and the potential increase from the Bill’s measures. I assure your Lordships that we are working across government and with business and the unions to identify ways to improve a system that we inherited that is not working currently for anyone.
We are already recruiting more judges and legal case workers and providing additional resources to ACAS. On top of that, we are considering other things, such as the role that the expanded fair work agency could play in reducing the time spent awaiting costly and lengthy tribunal claims.
I would be delighted to receive any constructive suggestions from the noble Lords on this issue, but it would be entirely disproportionate to make the vital improvements to workers’ rights contained in the Bill dependent on the kind of review that their amendments propose. It would be wrong to take workers’ rights to challenge unfair practices away from them when they are not to blame for the backlog that we are currently grappling with.
Baroness Lawlor (Con)
The Minister made reference to the number of judges that the Government are busily recruiting so as to help the backlog, and this is part of the Government’s response. Of the 35,000 extra civil servants recruited since March 2024—these are the March 2025 figures—how many are judges, and how many of them will be in the employment tribunal service? I do not expect the Minister to have the figures to hand, but I would be pleased if she could write to me.
Baroness Jones of Whitchurch (Lab)
My Lords, 50 new fee-paid employment judges were appointed in 2024-25, and a further three recruitment exercises to further increase capacity are now being undertaken in 2025-26.
Lord Hunt of Wirral (Con)
My Lords, I am very grateful to my noble friend Lady Lawlor for putting all this in the context of the security or insecurity of workers right across the board faced with this terrible backlog. The Minister upbraided me for the previous Government’s culpability in this, but she will know that we have been expressing serious concern about this backlog for a very long time. The fact is that it has got worse: it is 20% up on what it was when the Government came into office last year. The Minister was quite right to say there was a backlog, but my plea to her is not to make it worse.
As we draw this debate to a close, I worry that the Government have not fully grasped the critical importance of these amendments. They are not obstacles to progress but necessary safeguards to ensure that the rights we are creating are not rendered ineffective by an overwhelmed tribunal system. We urgently need clarity on the implementation plans.
The Minister promised that we would have the implementation plan “shortly”. The definition of “shortly” is “within the next hour or so”. In the dictionary, we are told that shortly means that something is about to happen. So where is it? I would like to believe that the noble Baroness’s reference to the word, which she must have carefully considered, means that tomorrow we will get it. I am very happy for her to interrupt me if I am incorrect—perhaps she could clarify.
Baroness Jones of Whitchurch (Lab)
I was trying to be helpful to the noble Lord, but since he provokes me, I will simply say that I have used my interpretation of “shortly”, rather than the dictionary definition. It will not be happening in the next hour, I can assure the noble Lord of that.
Lord Hunt of Wirral (Con)
Could I possibly have a copy of the noble Baroness’s dictionary? She has just quoted from her dictionary, but sadly I do not have it to hand. We would all like to see the implementation plan, so please can we, if possible, before our next day in Committee next Tuesday?
There are all sorts of issues we have discussed that have not been answered. Why a measured approach between day one and two years? Was it ever seriously considered? There has been no answer from the noble Baroness on that. Did she look at it or did she move straight to day one? The gap in reasoning leaves many of us deeply worried about the unintended consequences for workers and employers alike. Regrettably, these are crucial issues which remain unresolved, and the Government have yet to provide the assurances we need. As we approach Report, we will have to return to this matter with a determination to secure the clarity and commitments that are so essential if the Bill is ever to be successful. I beg leave to withdraw the amendment.
Lord Sharpe of Epsom (Con)
My Lords, most of what I needed to say was said in the last group, so I will not labour the points, except to add a bit of colour, because my noble friend Lord Hunt of Wirral and I consult quite widely. We consulted this morning with a distinguished employment lawyer, who told us that, if you apply now to an employment tribunal, you will have no chance at all of getting even a preliminary hearing for 10 months. That is next April. In order to get a resolution, a case resolved, you would be looking probably at December 2027. That is nearly two and a half years away. It will take a lot more than the number of judges the noble Baroness mentioned that they have recruited so far in order to fix that particular problem. I wish her good luck and I hope she succeeds, but I really do not think that we should be doing this.
Baroness Jones of Whitchurch (Lab)
My Lords, the first thing I will say to the noble Lord, Lord Jackson, is that if we say we are going to write, we will write: we do not need to be told that this is being monitored in some way. I would say that I feel that we on these Benches have bent over backwards to engage with noble Lords, not only in debates but outside, by having meetings and trying to work through some of these issues in more detail. So I do resent the accusation that we are somehow hiding from accountability on these issues. We are bending over backwards to be accountable.
I also say to the noble Lord, Lord Jackson, that we have updated the impact assessment and written to the noble Baroness, Lady Coffey, about it already. As noble Lords have said, we have now debated this issue quite extensively. We argue that the proposals we are putting forward will benefit not only employees but employers, by increasing the time within which workplace procedures and conciliation can be completed, creating an opportunity for more disputes to be resolved without the need for litigation.
Current ACAS performance data shows that that around a third of early conciliation notifications go on to submit an employment tribunal claim. Therefore, the longer period of time for resolving disputes internally and/or via conciliation will simplify the time limits for making employment tribunal claims and improve access to justice.
I have heard the arguments of the noble Lord, Lord Jackson, and, as I say, we have now debated this extensively. I can assure your Lordships that this clause and schedule are essential for those who need to bring a claim to a tribunal in order to have adequate time to prepare a robust claim. I therefore ask that they stand part of the Bill.
“Occupational and Personal Pension Schemes (Consultation by Employers and Miscellaneous Amendment) Regulations 2006
13A In the Schedule to the Occupational and Personal Pension Schemes (Consultation by Employers and Miscellaneous Amendment) Regulations 2006 (S.I. 2006/349) (employment rights and protections in connection with consultation), in paragraph 4(2)—(a) in paragraph (a), for “three” substitute “six”;(b) in paragraph (b), for “three” substitute “six”.”Member’s explanatory statement
This amendment extends from three to six months the time limit for bringing a claim in an employment tribunal under paragraph 4 of the Schedule to the Occupational and Personal Pension Schemes (Consultation by Employers and Miscellaneous Amendment) Regulations 2006.
Lord Hunt of Wirral (Con)
My Lords, I congratulate my noble friend Lady Penn on tabling this important amendment. The requirement for certain company directors to maintain and report a register of dependent contractors under substitution clauses is a measure that would bring much-needed transparency to a complex area of employment. It recognises the evolving nature of work arrangements in sectors such as courier services and taxi operations. Of course, there are compliance burdens associated with maintaining such registers, especially for large companies operating over multiple jurisdictions. Additionally, data protection considerations must be carefully addressed to ensure sensitive personal information is handled appropriately and securely. These are important factors that require careful balancing against the benefits of increased transparency. We look forward to hearing the Minister’s response.
Lord Leong (Lab)
My Lords, I thank the noble Baroness, Lady Penn, for her Amendment 280 and for meeting with my noble friend Lady Jones and me last month to discuss this very important issue.
I reassure the noble Baroness that the Government are already taking action to tackle the main risks that arise from substitution, including illegal working. As she mentioned, substitution is a complex area on which we are still gathering data.
An ONS online survey of around 10,000 businesses from across the UK, published this month, found that close to 3% of UK businesses use substitution clauses. While we do not know the number of substitution clauses used in the gig economy, we know that this could impact a large number of individuals. Although estimates of the number of gig economy workers vary vastly in various surveys, from around 500,000 to 4.4 million people—the noble Baroness mentioned some 4.7 million people—the CIPD finds that roughly 75% of those in the gig economy consider themselves to be self-employed.
We have introduced an amendment to the Border Security, Asylum and Immigration Bill, as was mentioned by the noble Baroness, to extend the scope of employers required to carry out right-to-work checks to those who engage limb (b) workers or individual sub-contractors, such as those working in the gig economy. This requirement will cover those working as substitutes.
We understand the complexity of these issues, and of employment status more widely, and that is why we have committed to consult in detail on a simpler framework for employment status. Comprehensive consultation will better account for the full range of today’s employment relationships, while addressing the minority of employers who will seek to avoid legal obligations.
We were clear that some reforms in our plan to make work pay will take longer to undertake and implement. We do not have a set timeline for consulting on employment status at this point, and I assure the noble Baroness that we will keep her up to date as and when this happens. We understand the complexity of employment status, as I mentioned earlier, and we are definitely committed to consulting in detail. Comprehensive consultation will better accounts for the full range of today’s employment relationships, while also addressing the minority of employers who will seek to avoid legal obligations, as I mentioned.
The noble Baroness’s amendment would create significant additional reporting burdens for businesses and would not necessarily change how those businesses use substitution clauses, as I mentioned in my earlier speech. I therefore ask the noble Baroness, Lady Penn, to withdraw Amendment 280.
Baroness Penn (Con)
Before the Minister sits down, could I confirm what I think I heard, that the amendments to the borders and immigration Bill will cover the use of substitute workers and substitute clauses with the extension of right-to-work checks?
Lord Leong (Lab)
I had better clarify this. I said that the amendment to the Border Security, Asylum and Immigration Bill will extend the scope of employers required to carry out right-to-work checks to those who engage limb (b) workers—perhaps one could classify that as those without many rights—or individual sub-contractors, such as those working in the gig economy. Perhaps that answers the question of the noble Baroness.
Baroness Penn (Con)
So not, therefore, the use of substitute workers. That answers my question, but it leaves the issue unaddressed. The challenge before the Government is that they have acknowledged the existence of this problem, with amendments brought to the borders and immigration Bill on Report, but they propose to leave this loophole unaddressed. The powers they are bringing in that Bill will require further consultation and then secondary legislation, and the Minister was not able to put a timeline on that. If this is not addressed by those proposals in that Bill, then when will it be addressed?
Lord Leong (Lab)
I thank the noble Baroness. I stand corrected on that point. The officials have just given me a note that it does cover substitute workers.
Baroness Penn (Con)
Okay. Perhaps it might be good to sit down between now and Report and clarify the exact proposed powers in that Bill. If it does—although the powers are then for secondary legislation and the detail is to be worked through—if the Government are taking the powers to address this loophole and can do it through secondary legislation under that Bill, that is welcome news. The transparency measures proposed in my approach were really an interim measure due to scope and other wider considerations. If we can directly place the obligation to carry out right-to-work checks on those organisations engaging people and their substitutes, then that would be very welcome news indeed. In the meantime, I beg leave to withdraw my amendment.
Lord Sharpe of Epsom (Con)
My Lords, I thank my noble friend Lady Noakes for so expertly introducing her amendment, and I welcome the contribution from my noble friend Lady Penn regarding the establishment of an employment law advisory committee.
We believe my noble friend’s amendments would significantly strengthen the framework for effective and balanced labour market regulation. The creation of a dedicated advisory committee, modelled on the Social Security Advisory Committee, seems a prudent and timely measure. It would provide the Secretary of State with expert independent advice that draws from a diverse range of perspectives: employers, workers, and independent experts alike. This inclusive composition is vital to ensuring that any regulations developed under the enacted Bill are well-informed, fair and workable in practice.
Moreover, the proposed committee’s clear statutory function to scrutinise draft regulations before they are laid before Parliament would introduce an important additional layer of oversight and transparency. It would help to ensure that regulations and the views of all relevant stakeholders are carefully considered. The requirement for the Secretary of State to publish the committee’s report alongside any laid regulations, including an explanation when recommendations are not followed, would enhance accountability and public confidence in the regulatory process.
In sum, we think that these amendments represent a balanced and constructive approach to policy-making in the complex area of employment law. They would help guard against rushed or poorly considered regulations, support better policy outcomes and uphold the principles of consultation and transparency that are essential to good governance.
Baroness Jones of Whitchurch (Lab)
My Lords, I thank the noble Baroness, Lady Noakes, for her Amendments 299 and 300. The Government have already committed to consulting on the detail of implementation and have already undertaken extensive engagement with employers, businesses and workers’ representatives, trade unions and experts. We will continue with this approach as we develop our secondary legislation.
There are some specific instances, such as in the enforcement space, where we are proposing setting up an expert group. Upgrading the enforcement of workers’ rights is an important and complex task, where it is right to draw on expertise from businesses, workers and independent representatives.
That is why the Bill requires the Secretary of State to establish an advisory board. It will play a critical role in providing advice and insight to the Secretary of State on their enforcement function under Part 5 of the Bill, which they will in practice deliver through the fair work agency. This is a proportionate and necessary step to help ensure the agency’s effectiveness. But this is not required across the Bill and wider labour market legislation as a whole. The committee proposed by the noble Baroness would be a repetition of the planned engagement and consultation on the Bill. We have already engaged with more than 190 different stakeholder organisations on our Plan to Make Work Pay, including employers of all sizes, from SMEs to large corporations, trade unions and representative organisations representing thousands of businesses and millions of workers.
We have held round-table discussions focused on particular topics, such as zero-hours contracts, and with particular groups, such as leaders of small businesses or retailers. As a Government, we are committed to engaging closely on our plans, and we will continue to do so. This engagement will continue throughout implementation, including as we develop regulations under the Bill.
On parliamentary scrutiny, the Select Committees will of course scrutinise the government proposals and reforms as they are rolled out. The Economic Affairs Committee had an inquiry on the labour market, and the noble Baroness was herself a member of that committee, so we know that there are already bodies in the parliamentary network that can be used to provide that scrutiny. On the basis of our proposed consultation and the parliamentary scrutiny available, I ask the noble Baroness to withdraw her Amendment 299.
Baroness Noakes (Con)
My Lords, I will not detain the Committee for long. With the exception of the expert group, which I was not aware of, I could have written the Minister’s speaking notes myself. They ran along the lines of, “Blah, blah, blah, consultation; blah, blah, blah, Select Committees” and, basically, “We know best”.
My amendment was a genuine attempt to try to enhance the process of parliamentary scrutiny. As I am sure the Minister is aware, Select Committees are simply not set up to deal with the detail of secondary legislation; they are set up to do some things very well—usually broader-ranging topics such as those undertaken by the Economic Affairs Committee of your Lordships’ House—but they never attempt to look at secondary legislation. I can see a lot of secondary legislation coming down the line and the need for a better process and greater information to help Parliament in its job on that.
I am not surprised by the Minister’s response. Before we get to Report, I will consider again what to do with my ideas, which I had hoped would be constructive contributions to the Government’s Bill. I beg leave to withdraw.